Oil prices experienced a sharp decline on Friday following Iran’s announcement that the Strait of Hormuz would remain open to commercial shipping for the duration of the current ceasefire. This strategic waterway, a narrow chokepoint through which approximately one-fifth of global crude oil is transported, had faced disruptions from Iran amid the escalation of the US-Israeli offensive. As a result, oil prices surged to nearly $120 a barrel, raising concerns about global supply chains. However, Brent crude fell below $90 a barrel, marking a nearly 10% decrease, while US West Texas Intermediate dropped more than 10% to under $82.
Analysts noted that the announcement had an immediate impact on the markets. Kathleen Brooks, research director at XTB, stated, “This news is having an immediate impact on markets. It gives hope that the war will end soon, and supply chains will return to some normality.” The positive development also buoyed stock markets, with Wall Street’s S&P 500 and Nasdaq Composite opening higher, building on record closes from the previous session. European indices mirrored this trend, as Frankfurt’s DAX and Paris’s CAC 40 each gained more than 2%.
Iranian Foreign Minister Abbas Araghchi shared the news on social media, although it remained unclear whether he was referring to the 10-day truce between Lebanon and Israel or an earlier two-week ceasefire between Iran and the United States. Meanwhile, President Donald Trump asserted that the US blockade of Iranian ports remains in effect. In response to the situation, France and the UK are co-chairing discussions among allies to consider deploying a multinational force to ensure free passage through the Strait once hostilities cease.
Market observers pointed out that the rapid rebound in equities—nearly 12% in just over two weeks—has taken some investors by surprise, prompting them to cover short positions at a loss. Asian markets presented mixed results, with Tokyo’s Nikkei declining after reaching a record high the previous day, and Taiwan’s TAIEX slipping despite briefly becoming the world’s seventh-largest index by market value. As the ceasefire holds and shipping lanes reopen, traders and policymakers are closely monitoring the situation for signs of further de-escalation.
Comments are closed for this story.